Market Commentary 5/7/2010
It would appear at first blush that yesterday’s (May 6, 2010) unusual activity – world wide – was not a result of market fundamentals. Our process, which seeks to take advantage of highly volatile conditions in the market happened to be quite busy yesterday, but mainly on the international front. We had about 70% of our buy orders for non U.S. business sector ETF funds trigger yesterday. Our domestic ETF funds were not as volatile and therefore didn’t trip outstanding buy orders, but the domestic ETF funds did move closer our buy targets. To put the events into perspective, the market advances over the last year have allowed our portfolios to build a solid position in cash and we believe we are poised to put the cash back to work if a market correction were to materialize.
On the bond fund side, we saw selling in the longer duration funds BLV and TLT (20+ year bond funds). This was a result of people selling yesterday and shifting assets to more conservative bonds of U.S. denomination.
So, while such a day isn’t healthy for the markets, it is our opinion that yesterday was not a fundamentally driven event. Rather it was another “shock.”
